Hot potato: Bihar govt clarifies that VAT only on 'packaged samosas and kachoris'

The Bihar government clarified that 13.5 per cent VAT will be applied on “packaged dry samosas and kachoris” that are selling over Rs 600 per kg and not those sold at wayside eateries, reports The Indian Express. Earlier this week, Bihar said it will impose a "luxury tax" on samosas -- one of the country's most popular snacks -- sparking widespread outrage.

The Bihar government announced plans this week for the new levy to offset an anticipated plunge in the state's revenues when a ban on alcohol sales comes into force in April.

Bihar, one of India's poorest states, is anticipating a Rs 4,000 crore annual excise tax loss once the proposed liquor ban kicks in. The state cabinet on 13 January decided to impose VAT on selected luxury items, including clothes selling for over Rs 500 per metre and saris priced over Rs 2,000, cosmetics, mosquito repellents, perfumes, inverters, industrial cables, transformers and sand.

Opposition BJP got a good chance to hit out at the Nitish Kumar government, saying the measure would not help in increasing revenue collection.

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“Though we have nothing against taxation of packaged samosas and kachoris but it is only five per cent in neighbouring states like UP, West Bengal and Jharkhand. Any tax not compatible with neighbouring states gives rise to tax evasion. Plus, such taxation on food items is not going to substantially increase tax collection,” BJP leader Sushil Kumar Modi is quoted as saying in The Indian Express.

Cosmetics, perfumes and some sweets were also among the "luxury" items to be taxed at 13.5 percent, but the decision to include the much-loved pastry snack was met with bafflement on social media.